What the Chancellor’s call for tax transparency means for small businesses

 In Small Businesses & Startups

As of 6th April 2016, HMRC will require small business owners to declare who owns shares in the company, and who influences strategic decisions due to the Chancellor calling for tax transparency.

The Person of Significant Control register (PSC) forms part of the government’s stated drive for greater tax transparency, which gathered steam following the release of the Panama Papers earlier this year.

Small business owners will be required to state the information on an Annual Confirmation Statement and on their own PSC register, while start-ups will be asked to log this data as part of their incorporation application. The record will appear on the public register at Companies House.

This will leave companies open to more in-depth scrutiny from tax authorities and will likely influence the decisions of potential investors.

A ‘person of significant control’ is defined by the taxman as a person that has:

  • Over 25% of shares or voting rights in the company
  • Authority to appoint or remove the majority of the board of directors
  • Significant influence or control over a company, trust or other body

The registers should commence from 6th April, and must be in place by 30th June to avoid fines or other legal action.

Small businesses will need to declare the following information for each PSC:

  • Name, D.O.B and nationality
  • Country or region of residence
  • Service and residential address
  • Date person became PSC (6th April for existing companies)
  • Which PSC criteria are met
  • Whether there’s been an application to protect the individual’s information

If you want more expert accountancy advice for small businesses, call on the friendly team at 3 Wise Bears today.

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